Swadeshi Jagran Manch, the
economic wing of the Rashtriya Swayamsevak Sangh has hit out at the
Reserve Bank of India for not lowering rate of interest even when the
inflation is down to 2 per cent, holding it responsible for the current
slowdown in the economy.
"The RBI has been the major reason for
the slowdown. The Monetary Policy Committee of the RBI has been working
on the wrong model and faulty frameowrk. All over the world the rates of
interest come down as inflation comes down, but in India it does not
happen," Aswini Mahajan, head of the Swadeshi Jagran Manch, told IANS.
the rate of inflation was 10-12 per cent, the repo rate was 8.5 per
cent even then. Now the inflation has come down to 2 per cent, the repo
rate is 5.75 per cent," he added.
Ratings agency CRISIL on
Thursday cut India's GDP growth to 6.9 per cent for FY20 on weak monsoon
rains and muted corporate results. In its monetary policy review on
June 6, 2019, the Reserve Bank of India lowered its 2019-20 growth
projections to 7 per cent, from 7.2 per cent estimated in April.
central bank expects India's GDP to grow at 6.4-6.7 per cent in
April-September and 7.2-7.5 per cent in October-March 2019-20.
signs were visible since last year, with GDP growing 6.6 per cent in
October-December 2018. GDP growth slipped to 5.8 per cent in the last
quarter of 2018-19 and annual GDP at 5-year low of 6.8 per cent.
The RBI will hold its Monetary Policy Committee meeting for rate of interest on August 5-7.
the interest rate is always an important policy variable. It would
impact housing, automobile, demand and investment. A slight 1 per cent
decline in interest rate can give a boost to the economy. During A.B.
Vajpayee's tenure, demand was high because repo rate had come down to 5
per cent giving the leeway to banks to withdraw more money from RBI to
lend but in the whole NDA period (2014-19), the RBI missed that
opportunity to give a boost to the economy in the garb maintaining the
priceline and checking the inflation," said Mahajan.
reason to reduce it and every time they said though inflation was down,
it could go up in future so therefore we would not like to reduce repo
rate. This had a tremendous impact on the economy. Such opportunities of
lower inflation do not come quite often," Mahajan said.
of that fact the the economy could have been boosted by the good
policies of the RBI, which was in a love-hate relationship with the
government, that was a very sad state of affairs. Monetary and fiscal
policy go hand-in-hand. If monetary policy makers think they live in
their niche, that is not correct," he said.
"They have to work in
sync with the government. Earlier the RBI officials were living in
their own niche and were making statements outside, which affected the
overall image of the economy. When Viral Acharya is saying our country
is going the Argentina way, what message are you giving? These people
should have been sacked then and there," Mahajan said.
Viral Acharya resigned from RBI last month citing personal reasons and is back in the US.
The RBI managment of that time had major shortcomings which failed to provide the necessary boost to the economy, Mahajan said.
Raghuraman Rajan and Urijit Patel were the RBI Governors during 2014-19.
said GST is a new application in the economy and it is good for the
system, but it had its share of glitches. However, in the last two years
of GST, the government is quite prudent in its approach such as
reducing the burden of compliances, rates and addressing concerns of the
small traders. Even this had a price though it is gradually coming to
settle down, he said.
That (the GST's initial teething issues)
impacted the revenue of the government. GST revenues have not been to
the expected level. There was a gap of Rs 70,000-Rs 80,000 crore in GST
revenue last fiscal, he said.
According to Mahajan, the other
point is Indian economy is bank-based. In the last few years because of
the NPA problem, some banks stopped lending and NPA problem was caused
by sudden spurt in lendings during the UPA rule. Because of that the
health of the banking system got impacted and many of the banks came to a
phase where no more lendings could be made. Now NPAs have started
coming down and banks can be asked to start lending, he added.